Republicans Unveil Their Obamacare Replacement

The plan is for people to pay for more of their health care.

A trio of Sen­ate Re­pub­lic­ans on Monday in­tro­duced their plan to re­place Obama­care with a new sys­tem that is built largely around mak­ing in­di­vidu­als re­spons­ible for a high­er por­tion of their health care costs.

GOP lead­er­ship is still mired in a years-long tug-of-war between of­fer­ing an Obama­care al­tern­at­ive and throw­ing stones from the side­lines. A plan makes the party look ser­i­ous about health care policy, but put­ting pro­pos­als on pa­per car­ries its own risks be­cause in health care, there are trade-offs to everything.

That de­bate not­with­stand­ing, three Re­pub­lic­ans with long back­grounds in health care policy — Sens. Or­rin Hatch, Richard Burr, and Tom Coburn — have put to­geth­er a frame­work they say should take the place of Obama­care if a Re­pub­lic­an pres­id­ent and Con­gress were to re­peal the law after the 2016 elec­tions.

In es­sence, the plan at­tempts to lower health care costs by mak­ing people shoulder a great­er share of those costs — or “sens­it­iz­ing” con­sumers to the ac­tu­al cost of health care, as Sen­ate aides put it in a meet­ing with re­port­ers on Monday.

Most people don’t re­cog­nize how much their em­ploy­er con­trib­utes to their health care plan and don’t see the costs the in­sur­ance com­pany cov­ers: If people are spend­ing more of their own money, many con­ser­vat­ives ar­gue, they’ll be smarter con­sumers. Over­all costs will come down, the ar­gu­ment goes, if con­sumers have more “skin in the game.”

Here’s how the latest plan would go about mak­ing that shift:

Many people with em­ploy­er-based health in­sur­ance would pay more.

About 85 per­cent of Amer­ic­ans get health be­ne­fits through their job. Those health care be­ne­fits have two kinds of tax pro­tec­tions. First, the em­ploy­er can de­duct its costs. Second, the em­ploy­ees’ share of their premi­ums comes out of their paychecks be­fore taxes are taken out. The GOP plan would cap that ex­clu­sion, so that only 65 per­cent of the av­er­age plan’s costs would be tax-ex­empt.

If your plan is in line with the av­er­age, you’d pay taxes on 35 per­cent of your premi­um. If it’s above av­er­age, you’d pay taxes on more. If it’s be­low av­er­age, you’d pay taxes on less. The idea is to make con­sumers more aware of how much their health care plan costs (by mak­ing them pay part of it), so that em­ploy­ees will go to their bosses and ask for cheap­er plans.

Some people with preex­ist­ing con­di­tions would pay more.

Obama­care re­quires in­surers to cov­er people with preex­ist­ing con­di­tions. The GOP plan would ex­tend that re­quire­ment only to people who have had con­tinu­ous cov­er­age. So, if you lost your job and im­me­di­ately bought in­sur­ance on your own, you’d be pro­tec­ted. If you let your cov­er­age lapse, you’d have to pay more be­cause of your preex­ist­ing con­di­tion.

This is, in es­sence, a re­place­ment for Obama­care’s in­di­vidu­al man­date. Rather than dir­ectly fin­ing people who don’t buy in­sur­ance, Re­pub­lic­ans would al­low in­sur­ance com­pan­ies to charge those people more. Both policies aim to cre­ate a fin­an­cial in­cent­ive for people to re­main covered. The key dif­fer­ence is that young, healthy people will primar­ily be the ones pay­ing the pen­alty un­der Obama­care, while the GOP ver­sion is aimed at people who are un­healthy.

People would move from Medi­caid to private in­sur­ance.

Obama­care gives states the op­tion of ex­pand­ing Medi­caid eli­gib­il­ity. The GOP plan would re­peal the ex­pan­sion and also nar­row the field of people who re­ceive Medi­caid. The Medi­caid pro­pos­al is what’s known in wonkese as a “per cap­ita cap” — in short, re­struc­tur­ing Medi­caid fin­an­cing to en­sure it cov­ers cer­tain pop­u­la­tions in each state. In this vis­ion, the pro­gram would primar­ily serve moth­ers, preg­nant wo­men, and the dis­abled. Oth­er low-in­come people would likely move in­stead to private in­sur­ance.

The plan re­places Obama­care’s tax sub­sidies.

Obama­care of­fers tax cred­its to help people af­ford their in­sur­ance premi­ums if they buy in­sur­ance on their own, rather than get­ting it through an em­ploy­er. The GOP plan does, too, but the cred­its are smal­ler. Un­der Obama­care, sub­sidies are avail­able to people whose in­comes are up to four times high­er than the poverty line. The GOP would roll them back to three times the poverty line.

Obama­care’s sub­sidies are pegged to the cost of a typ­ic­al in­sur­ance plan; un­der the GOP pro­pos­al, it’s a fixed dol­lar amount. Un­der Obama­care, the size of your par­tic­u­lar sub­sidy changes based on your in­come (poorer con­sumers get a big­ger sub­sidy). Un­der the GOP plan, it slides based on age. (Every in­di­vidu­al between 18 and 34 gets a $1,650 tax cred­it, no mat­ter how much money he or she makes, if these in­di­vidu­als don’t get cov­er­age through an em­ploy­er.)

Most of Obama­care’s man­dates/con­sumer pro­tec­tions would go away.

De­pend­ing on your per­spect­ive, Obama­care either of­fers con­sumers the peace of mind that their in­sur­ance will cov­er them when they need it, or im­poses costly new be­ne­fits that con­sumers may not want. However you see those policies, they’d go away.

Hatch, Burr, and Coburn would re­peal the pro­vi­sion re­quir­ing in­sur­ance com­pan­ies to cov­er cer­tain be­ne­fits, in­clud­ing pre­vent­ive care. They would let in­surers re­in­state an­nu­al caps on the be­ne­fits they’ll pay out, which Obama­care elim­in­ated. And most re­stric­tions on how in­surers set their premi­ums — say, pro­hib­it­ing them from char­ging wo­men more than men — would van­ish.

The only man­date that would re­main is a ban on life­time lim­its. Re­pub­lic­ans be­lieve that re­mov­ing cov­er­age man­dates would bring down the cost of in­sur­ance so that con­sumers’ dol­lars — and their tax cred­its — would go fur­ther.

The Fed has raised rates another quarter point, to a target rate of 1.25 percent to 1.5 percent. Two members dissented in favor of keeping rates stable. As of this moment, they expect to make three more quarter-point hikes in 2018, and two in 2019. This meeting of the Federal Open Market Committee was Janet Yellen's last as chair.

At a hearing before the House Judiciary Committee today, Deputy Attorney General Rod Rosenstein said "there's nothing inappropriate about FBI officials on special counsel Robert Mueller's team holding political opinions so long as it doesn't affect their work." Chairman Bob Goodlatte (R-Va.) said recently disclosed texts among former members of Mueller's team, "which were turned over to the panel Tuesday night by the Justice Department, revealed 'extreme bias.'"